WASHINGTON — Despite a personal appeal Tuesday from President Bush, key House Democrats refused to drop their determined opposition to plans for giving banks broad new powers in the insurance and securities business.
One angry Democrat, powerful Rep. John Dingell (D-Mich.), said after leaving a White House meeting with the President that theAdministration's bank reform proposal opening ownership of banks to commercial and industrial firms would permit failing corporations, "the Soviet national bank, Saddam Hussein or the Chinese People's Republic" to buy American banks.
But a Treasury spokesman, dismissing Dingell's criticism, said in response: "Right now, foreign banks and foreigners can buy American banks. What our bill does is allow American banks to draw on American capital rather than being forced to go overseas for it."
Dingell, chairman of the House Energy and Commerce Committee, remained a seemingly immovable object to the Administration plan despite the President's plea for help in achieving its quick passage. The Administration wants the bill approved by the House before the August congressional recess.
House Speaker Thomas S. Foley (D-Wash.), who also attended the bipartisan session, said the President appealed for cooperation and was given a respectful hearing.
The Administration's plan won easy approval last month from a House Banking, Finance and Urban Affairs subcommittee, with only modest changes. It now faces stiffer opposition as it moves to the full Banking Committee and to Dingell's committee, which has jurisdiction over securities legislation.
Along with Dingell, Rep. Henry B. Gonzalez (D-Tex.), chairman of the Banking Committee, opposes many aspects of the broad Bush plan. He would prefer a narrower effort aimed at replenishing the depleted bank deposit insurance fund.
The legislation has not yet come up in the Senate.
Dingell holds the same suburban Detroit congressional seat as his father, who played a key role in New Deal legislation that constructed barriers between banking and the securities business. Those laws remain on the books today, and Dingell remains deeply skeptical of the idea of banks being permitted both banking and commerce functions.
"The minute a (firm) is owned by a bank" it can easily borrow money from the Federal Reserve system, Dingell said. He raised the specter of a trading firm owned by a Communist country buying a bank, or a failing American corporation buying a bank, and then requiring a federal bailout.
